5 Ways to Mitigate Human Capital Risk When Employing in North America

Whether you’re a Canadian business owner looking to hire American employees or an American manager staffing a Canadian expansion, you know exactly how much stock your organization places in your people. Human capital is often one the biggest assets any company has. In fact, many experts now theorize people are one of the only things that set organizations apart from their competition.

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As with anything in business, building and maintaining human capital comes with risks. People you’ve spent years training may decide to leave. Hiring a new person has inherent risks. There are also risks associated with labour laws and compliance, some of which can turn into costly legal matters. Accidents and injuries are other risks.

These five methods can help you manage and mitigate some of the risks associated with human capital in North America.

These five methods can help you manage and mitigate some of the risks associated with human capital in North America.

1. Plan ahead for risks

The first thing you should do is identify the risks associated with your human capital on both sides of the border. What are the costs associated with an unmotivated or disengaged employee? What are the risks of hiring someone who isn’t the right fit?

Keep in mind that risks extend beyond hiring and dismissing employees. Many accidents and injuries take place in the workplace, which pose risks to you in terms of talent loss and legal costs.

Don’t wait for the worst to happen. Instead, identify the risks and create a plan to deal with them as they arise in the business.

2. Invest in a talented workforce

Investing in a talented workforce is essential for businesses aiming to thrive in today’s competitive landscape. A skilled and motivated team not only drives innovation and productivity but also enhances a company’s reputation and ability to attract new clients. By prioritising the recruitment and retention of talented individuals, organisations can foster a culture of excellence that translates into improved performance and profitability.

A well-trained workforce is more adaptable to change, ensuring that the business can pivot and respond effectively to market demands. In a rapidly evolving economy, the long-term sustainability of a business relies heavily on its ability to harness the potential of its human capital, making talent investment is not just a strategic advantage but a vital requirement for future success.

3. Foster a Positive Workplace Culture

Many of the human capital risks for North American businesses involve employee behaviour. A disengaged employee is a flight risk, but they might also engage in unethical behaviour. Employees who are under pressure to perform may not act ethically either. Still other employees may abuse positions of power.

You can avoid many of these problems by building a positive work culture in your organization. Determine your values and communicate them to employees. Then walk the walk. If you say you value employee feedback, be sure to collect it and act on it.

Put some emphasis on valuing your people, and, in return, they’ll value your company.

4. Change How You Conceptualize Risk

While the traditional HR approach to managing human capital risk is solid, you might want to take cues from some of the other divisions in your organization. How does the IT department approach risks? What about the financial division?

One way to reframe risk is to see it as an opportunity to optimize uncertainty. You don’t know which employees will be star performers and which ones won’t quite fit the bill when they start. Take steps to manage this uncertainty. In doing so, you’ll increase the chances of finding more star performers.

5. Use Data to Inform Strategies

You collect workforce data; put it to good use. Don’t just collect it. Instead, organize and analyze it.

By doing so, you can discover the insight you need to make better decisions. Determining where your risks are can provide you with the knowledge you need to develop a better risk management strategy.

6. Ensure compliance with labor laws and ethical standards

When managing a workforce, it is paramount for organisations to ensure compliance with labour laws and ethical standards. These regulations not only protect employees’ rights but also foster a fair and healthy working environment.

Labour laws cover a wide array of topics, including minimum wage, working hours, discrimination, workplace safety, and benefits. By adhering to these regulations, businesses not only minimise the risk of legal repercussions but also enhance their reputation as responsible employers.

A commitment to compliance reinforces trust with employees, which in turn can lead to increased loyalty and productivity.

Organisations that prioritise ethical standards are likely to attract and retain top talent, as potential employees increasingly seek workplaces that align with their values.

Compliance with labour laws and a strong ethical framework not only safeguard the organisation legally but also create a positive organisational culture that drives long-term success.

7. Work with the Experts

Human capital risk management across borders comes with many challenges. You may not be familiar with the local labour market, for example, or you might not be familiar with regulations around the hiring process.

Working with experts on either side of the US-Canada border can help you manage your risks more effectively. It’s particularly helpful when you’re navigating the legal waters around your HR operations.

These tips can help you reduce and mitigate various human capital risks in your operations. By doing so, you’ll set up your company to grow its human capital and succeed in almost any market you enter.

Mitigate human capital risk when hiring abroad with Payroll Edge

With Payroll Edge, businesses can focus on their core objectives of growth and innovation, confident that their human capital risks are effectively managed.

FAQ

• What are the most common employment risks in the workplace?
• The most common risks include discrimination/harassment claims, wrongful termination lawsuits, wage and hour violations, workplace safety incidents, and intellectual property theft.
• How can employee misconduct affect business operations?
• Employee misconduct can lead to financial losses (theft, fraud), reputational damage, decreased morale, reduced productivity, legal action, and a hostile work environment.
• What are the consequences of non-compliance with employment laws?
• Consequences include significant financial penalties (fines, back pay, damages), legal disputes, operational restrictions, reputational harm, and potential criminal charges.
• What is the role of HR in mitigating employment risks?
• HR’s role involves developing and enforcing compliant policies, conducting training, ensuring fair hiring/firing processes, managing performance, handling complaints, and staying updated on labor laws.
• Can employee training reduce employment risks?
• Yes, effective training significantly reduces risks by educating employees on policies, compliance, ethics, safety, and preventing issues like harassment or discrimination.
• What are the employment risks of hiring temporary workers?
• Risks include misclassification (leading to benefit and tax liabilities), co-employment issues, inconsistent quality of work, and challenges with integration or intellectual property protection.
• What are the main types of human capital risks affecting organizations?
• Main types include talent acquisition/retention risks, skill gaps, leadership/succession risks, culture/engagement issues, productivity risks, and compliance/conduct risks.
• How do companies measure and quantify human capital risk?
• Companies measure by tracking metrics like turnover rates, absenteeism, training completion, safety incident rates, compliance audit results, and litigation costs related to HR issues.
• What are the consequences of human capital risk on business performance?
• Consequences include decreased productivity, higher operating costs, lower innovation, reduced revenue, inability to meet strategic goals, and weakened competitive advantage.
• How does human capital risk impact business reputation and brand?
• Human capital risk negatively impacts reputation through public scandals, poor employee reviews (e.g., Glassdoor), loss of public trust, difficulty attracting talent, and decreased customer loyalty.

How Payroll Edge Can Help

Managing human capital across North America presents unique challenges, from navigating diverse labor laws to fostering a positive workplace culture and leveraging data effectively. Identifying risks, investing in a talented workforce, and continuously adapting to change are all crucial for success. However, the intricacies of cross-border employment, especially concerning compliance and local market nuances, can be overwhelming. 

This is where Payroll Edge becomes an invaluable partner; businesses can mitigate human capital risk when hiring abroad, ensuring seamless compliance with labor laws and ethical standards.

We empower you to focus on strategic growth and innovation, confident that your most valuable asset—your people—are managed effectively and compliantly, no matter where they are located. 

To proactively address your human capital risks and ensure your cross-border operations thrive, contact Payroll Edge today.